SiHong A Tran
Unit Brixton Road Berala
Berala NSW 2141
Australia Taxation Australia
3rd edition, 2020
Module 1: Legal, Ethical and Regulatory Fundamentals
1.1: Tax law environment 2
Overview of the Australian Legal System 2
Power to raise taxes in Australia 3
Progress of taxation bills through Parliament 4
How the Courts interpret taxation law 6
Taxation and Administrative Law 8
1.2: Ethical principles and behaviour 11
Ethical principles 11
APES 110 – Code of Ethics for Professional Accountants 13
Situations where ethical conflicts may arise 18
Steps for Making a Good Decision 18
Ethical Dilemma Checklist 19
1.3: Tax Practioner Obligations 19
What is the Tax Practitioners Board 19
Tax Agent 20
Bas Agent 22
Tax (financial) Adviser 24
What is the Australian Financial Services Licensing Regime? 24
Registering as a Tax Agent, BAS Agent, Tax 25
1.4: Tax Practitioners Board code of conduct 26
Principles of the TPB Code of Professional Conduct 26
Code of Operations for Tax (financial) Advisers 27
1.5: Tax Planning, Avoidance and Evasion 29
Tax Fraud / Evasion 29
Tax Planning: - Legal means in a way intended by legislation 54
Promoter Penalty Regime 55
All Rights Reserved - Sam Bendisan ©
Copyright: Sam Bendisan ©
,Australia Taxation Copyright - Sam Bendisan
3rd edition, 2020
TAX LAW ENVIRONMENT p2
Overview of the Australian Legal System p2
Division of Powers
Power is shared between the federal government and the various state governments.
The Australian Constitution outlines the division of powers and gives the federal government the power to
make laws regarding the collection of income tax.
Separation of Powers
Ensures that no one arm of government holds all the power. Power is shared between the three separate
arms of government:
• Legislature – makes law by passing legislation
• The Judiciary – interprets and applies the law to individual cases
• The Executive – responsible for implementing laws passed (ATO is a member)
Power to raise taxes in Australia p3
Section 51(ii)
• General power to make laws in respect to taxation.
• This is a concurrent power (because states and territories may also make taxation laws, except those
reserved exclusively for the Commonwealth such as Duties, Customs, excise per s.90).
• Federal Gov’t has power to enact grants to states and territories (s.96).
Section 114 – State powers
• Raise taxes: stamp duty, land tax & payroll tax
• municipal authorities (city councils): rates, levies (e.g. garbage collection).
Section 53 – taxation bill CANNOT originate or be amended in the Senate Section 54 and 55 –
appropriation and imposition
Assessment Acts
• ITAA36 & ITAA97 – govern the assessment and collection of income tax.
Progress of taxation bills through Parliament p4
Step 1 – Preparation of bill
Step 2 – First Reading – introduced in HOR
Step 3 - Second Reading
Step 4 – Third Reading
Step 5 – Reading in the Senate – has another 3 readings.
Step 6 – Royal Assent
Step 7 – Commencement – Act may specify date of commencement, if not 28 days after Assent.
Retrospective taxation law
If a law does not commence from the date of announcement, but from a stated date in the Act, which
applies before the law receives Assent, then it is said to apply retrospectively.
How to amend taxation law
Governments may invite public discussion on taxation policy through stakeholders (TPB, CPA Australia etc.).
Treasury, may invite public submissions in response to draft legislation dealing with issues that are complex
and may have unintended consequences.
How the Courts interpret taxation law p6
Legislation is now the primary source of new law in Australia, but it does not automatically override common law
(though it will in circumstances where legislation shows a clear intention to do so).
Statutory interpretation
To apply legislation, Judges must first interpret and under it. Problems occur when the Judge has a difficulty
interpreting the Statute.
Situations that might lead to a need for statutory interpretation:
Copyright: Sam Bendisan ©
,Australia Taxation Copyright - Sam Bendisan
3rd edition, 2020
Federal Court System
Appeal to the High Courts from lower courts is by special leave. Appeals concerning taxation would stem from
decisions at the Federal Court.
Questions of law concerning taxation usually originate before a single judge of the Federal Court or the AAT.
Federal Court System p7
Copyright: Sam Bendisan ©
, Ratio decidendi
The Court’s reason for its decision.
The Doctrine of Precedent means that courts are bound by the ratio of courts higher in the court hierarchy.
Courts are not bound by a ratio from a lower or same court hierarchy, although it can be persuasive.
Obiter Dictum: Court’s making statements in their decision that are not essential to the decision but are made
in passing – persuasive and not binding.
Taxation and Administrative Law p8
The ATO administers legislation for taxes, superannuation and excise under supervision of the
Commissioner of Taxation, who in turn is appointed by the Governor General.
Commissioner of Taxation: granted powers of administration under s.8 ITAA36 and may delegate authority
to tax officers (e.g. tax audits, investigations).
Taxation Decisions (‘Objection Decisions’): Reviewable or appealable or both under Part IVC of the TAA.
Taxpayer can seek a review or appeal by either applying to the AAT or Federal Court.
Commonwealth Ombudsman
Appointed by the Governor-General as an independent person with wide powers to investigate complaints
about certain government departments and agencies such as the ATO.
Cannot overturn or remake a taxation review or decision. Only deal with matters that involve public officials
alleging wrongdoings in the public sector (e.g. corruption, abuse of power). Therefore, usually last resort.
Inspector-General of Taxation
For most administrative tax matters, the relevant body to contact is the Inspector-General of Taxation.
IGT is a statutory body, formed under the Inspector-General of Taxation Act 2003 (Cth) –
independent from both the ATO and the TPB.
Its Roles are:
Copyright: Sam Bendisan ©
Unit Brixton Road Berala
Berala NSW 2141
Australia Taxation Australia
3rd edition, 2020
Module 1: Legal, Ethical and Regulatory Fundamentals
1.1: Tax law environment 2
Overview of the Australian Legal System 2
Power to raise taxes in Australia 3
Progress of taxation bills through Parliament 4
How the Courts interpret taxation law 6
Taxation and Administrative Law 8
1.2: Ethical principles and behaviour 11
Ethical principles 11
APES 110 – Code of Ethics for Professional Accountants 13
Situations where ethical conflicts may arise 18
Steps for Making a Good Decision 18
Ethical Dilemma Checklist 19
1.3: Tax Practioner Obligations 19
What is the Tax Practitioners Board 19
Tax Agent 20
Bas Agent 22
Tax (financial) Adviser 24
What is the Australian Financial Services Licensing Regime? 24
Registering as a Tax Agent, BAS Agent, Tax 25
1.4: Tax Practitioners Board code of conduct 26
Principles of the TPB Code of Professional Conduct 26
Code of Operations for Tax (financial) Advisers 27
1.5: Tax Planning, Avoidance and Evasion 29
Tax Fraud / Evasion 29
Tax Planning: - Legal means in a way intended by legislation 54
Promoter Penalty Regime 55
All Rights Reserved - Sam Bendisan ©
Copyright: Sam Bendisan ©
,Australia Taxation Copyright - Sam Bendisan
3rd edition, 2020
TAX LAW ENVIRONMENT p2
Overview of the Australian Legal System p2
Division of Powers
Power is shared between the federal government and the various state governments.
The Australian Constitution outlines the division of powers and gives the federal government the power to
make laws regarding the collection of income tax.
Separation of Powers
Ensures that no one arm of government holds all the power. Power is shared between the three separate
arms of government:
• Legislature – makes law by passing legislation
• The Judiciary – interprets and applies the law to individual cases
• The Executive – responsible for implementing laws passed (ATO is a member)
Power to raise taxes in Australia p3
Section 51(ii)
• General power to make laws in respect to taxation.
• This is a concurrent power (because states and territories may also make taxation laws, except those
reserved exclusively for the Commonwealth such as Duties, Customs, excise per s.90).
• Federal Gov’t has power to enact grants to states and territories (s.96).
Section 114 – State powers
• Raise taxes: stamp duty, land tax & payroll tax
• municipal authorities (city councils): rates, levies (e.g. garbage collection).
Section 53 – taxation bill CANNOT originate or be amended in the Senate Section 54 and 55 –
appropriation and imposition
Assessment Acts
• ITAA36 & ITAA97 – govern the assessment and collection of income tax.
Progress of taxation bills through Parliament p4
Step 1 – Preparation of bill
Step 2 – First Reading – introduced in HOR
Step 3 - Second Reading
Step 4 – Third Reading
Step 5 – Reading in the Senate – has another 3 readings.
Step 6 – Royal Assent
Step 7 – Commencement – Act may specify date of commencement, if not 28 days after Assent.
Retrospective taxation law
If a law does not commence from the date of announcement, but from a stated date in the Act, which
applies before the law receives Assent, then it is said to apply retrospectively.
How to amend taxation law
Governments may invite public discussion on taxation policy through stakeholders (TPB, CPA Australia etc.).
Treasury, may invite public submissions in response to draft legislation dealing with issues that are complex
and may have unintended consequences.
How the Courts interpret taxation law p6
Legislation is now the primary source of new law in Australia, but it does not automatically override common law
(though it will in circumstances where legislation shows a clear intention to do so).
Statutory interpretation
To apply legislation, Judges must first interpret and under it. Problems occur when the Judge has a difficulty
interpreting the Statute.
Situations that might lead to a need for statutory interpretation:
Copyright: Sam Bendisan ©
,Australia Taxation Copyright - Sam Bendisan
3rd edition, 2020
Federal Court System
Appeal to the High Courts from lower courts is by special leave. Appeals concerning taxation would stem from
decisions at the Federal Court.
Questions of law concerning taxation usually originate before a single judge of the Federal Court or the AAT.
Federal Court System p7
Copyright: Sam Bendisan ©
, Ratio decidendi
The Court’s reason for its decision.
The Doctrine of Precedent means that courts are bound by the ratio of courts higher in the court hierarchy.
Courts are not bound by a ratio from a lower or same court hierarchy, although it can be persuasive.
Obiter Dictum: Court’s making statements in their decision that are not essential to the decision but are made
in passing – persuasive and not binding.
Taxation and Administrative Law p8
The ATO administers legislation for taxes, superannuation and excise under supervision of the
Commissioner of Taxation, who in turn is appointed by the Governor General.
Commissioner of Taxation: granted powers of administration under s.8 ITAA36 and may delegate authority
to tax officers (e.g. tax audits, investigations).
Taxation Decisions (‘Objection Decisions’): Reviewable or appealable or both under Part IVC of the TAA.
Taxpayer can seek a review or appeal by either applying to the AAT or Federal Court.
Commonwealth Ombudsman
Appointed by the Governor-General as an independent person with wide powers to investigate complaints
about certain government departments and agencies such as the ATO.
Cannot overturn or remake a taxation review or decision. Only deal with matters that involve public officials
alleging wrongdoings in the public sector (e.g. corruption, abuse of power). Therefore, usually last resort.
Inspector-General of Taxation
For most administrative tax matters, the relevant body to contact is the Inspector-General of Taxation.
IGT is a statutory body, formed under the Inspector-General of Taxation Act 2003 (Cth) –
independent from both the ATO and the TPB.
Its Roles are:
Copyright: Sam Bendisan ©
